JAKARTA (AFX-ASIA) - As Indonesia tackles crucial problems regarding its
economy, it is clear that President Suharto remains in sole charge of
policy-making, even on such key issues as a currency board, analysts said.
Comments by Finance Minister Mar'ie Muhammad before the People's
Representative Council (DPR) this week underlined the apparent impotence of
the nation's institutions, even on issues of national survival, they said.
Mar'ie and the DPR's finance commission held nearly three days of
question-and-answer sessions on the currency board proposal.
However, the only thing that became clear from the hearings was that both
the cabinet and the DPR, the country's parliament, are as much in the dark as
everyone else on what is potentially one of Indonesia's most important
monetary decisions in three decades, analysts said.
With the presidential election little more than a week away, and the
cabinet due to end its term on Saturday, President Suharto has yet to
announce a final decision on the currency board plan.
When pressed on the government's intentions, Mar'ie said the decision is
"entirely in Suharto's hands" and the monetary authorities' only role has
been to prepare the necessary regulatory framework.
"This issue should be decided by a presidential decision, not a
ministerial decision," Mar'ie said.
An economist at a leading local brokerage said he is not surprised that
the parliament so far has not shown a strong opposition to the plan.
"This is a normal practice here in the past 30 years under the New Order.
The parliment is just a rubber stamp," he said.
"I don't believe that under our constitution, it's only the president who
can make a decision on issues like this.
"The currency board will eventually change the central bank's role
therefore it needs a law to back it up," he said.
"It's understood that in an emergency situation, the president only needs
to implement an emergency regulation to subtitute existing laws -- but after
that he should consult the DPR."
The economist said the DPR effectively has veto power over presidential
policy initiatives.
"The DPR then can either approve the regulation as a law or reject it,"
he said, adding that parliament also has the right to use its initiative to
propose laws.
However, through either ignorance, lack of political will or other
factors, the DPR, whose members are largely appointed by Suharto, has rarely
exercised these powers during the past three decades.
"I think it's not only the president to blame but also the parliament.
The problem is they don't have expert staff like in other countries who
really understand issues like the currency board," the economist said.
He also said Suharto might have intentionally delayed any announcement on
the currency board as one way to fight speculators.
"I think the currency board system is one of Suharto's trump cards. He
understands well that by delaying the announcement, speculators won't dare to
make any big transactions because of the risk," he said.
Sassoon Securities Singapore analyst Vincent Ng said uncertainty over the
currency board plan proves that all major decisions are dependent on Suharto.
"I think the government is not helping us by not making any decision
quickly and by not being transparent. They just keep things close to their
heart," Ng said.
"All the facts show that the decision-making process is not dependent on
the system but on one man ... So, what should we think?" he said.
"If he needs DPR approval, then he can just call a few people (members of
parliament) to his office. Just like in the case of Habibie's nomination. The
president is like a god. Any decision does not depend on the DPR but on what
the president wants," he said.
"So do you think the DPR has power ... They don't have power."
Another analyst at a Singapore-based brokerage said Suharto may have
already made a final decision to push ahead with a currency board, but
delayed any implementation due to opposition from the IMF and the G7.
"He is just pretending that no decision has been made. Why should he do
that? People continue to guess and I think Suharto is trying to decieve or to
mislead the market. He pretends to be doing one thing while he is doing other
things," he added.
Sassoon's Ng said: "Under current circumstances, I think there is no
direction in the market. The rupiah will stay where it is and stocks won't
move significantly. People are not anticipating anything. They are just
waiting."
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